Debt is stressful, no matter what caused you to fall and lose control of your finances. Whether or not it was poor financial decisions or an unexpected medical emergency that began your spin out of control, debt needs to be handled as soon as it becomes a situation.
Struggling with credit card debt is stressful and confusing. But it doesn’t have to be. There are options to consolidate your debt, including filing for Chapter 13 Bankruptcy. Why choose Chapter 13 over hiring a debt consolidation company? Chapter 13 allows you to put you and your family ahead of the creditors.
In October of 2005 the new bankruptcy law, Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, added a credit counseling and financial management requirement. So, if you file bankruptcy today you are required to complete two financial management courses that will help you get your life back on track after your debt is discharged. Those courses include:
So you live in Roseville MN and you had one of the 5 events happened to you which resulted in overwhelming debt: 1) business failure; 2) income drop; 3) divorce or relationship break up; 4) medical problems; 4) bad financial decisions (we have all made them). You are stressed out because you are falling behind and you can’t keep up. That uneasy feeling of slowly drowning in debt, suffocating, and you can’t seem to pull out of it. If you are a human being you will feel your tummy churning and just a depression hanging over your head.
Life is humbling is it not? Who among us starts out in life with the dream of incurring overwhelming debt we cannot pay for? Naturally, none of us do. And yet, it happens to 10,000 plus Minnesotans each year. At Kain & Scott, we have been practicing bankruptcy law since 1972. We have never seen a person yet who says something like- hey, I just got back from a fabulous trip with all my friends, using my credit cards, knowing I was going to file bankruptcy when I returned.
Struggling with credit card and medical debt is stressful and confusing. But it doesn’t have to be. There are options to consolidate your debt, including filing a Chapter 13 Bankruptcy. Why choose Chapter 13 over using a debt consolidation company? Chapter 13 allows you to put you and your family ahead of the creditors. When working with a debt consolidation company, you pay them. They set up a repayment plan and collect a percentage as payment for their services. You’re paying all of the debt and then some. When finances are already tight, why pay more?
If you are struggling with debt, you may have considered debt consolidation but are unsure if it is right for your situation. Furthermore, you may be confused by the various types of debt consolidation. In its basic form, debt consolidation combines several debt accounts into one monthly payment. For some people, this may be an affordable solution to debt problems; however, you should only make this decision after discussing all of your options with an experienced attorney.
Eliminating calls from creditors, reducing finance charges, lowering interest rates, and only having one debt payment to worry about each month sounds wonderful to someone who is struggling to pay his or her debts. That is exactly what debt consolidation companies promise clients. Debt consolidation companies promise to cut years off your debt payments, help reorganize your debt, alleviate your stress and anxiety, and improve your financial situation.
As a bankruptcy attorney, I am often asked questions about consolidating debts, such as, “How does debt consolidation work?” and “Can I do this to avoid filing bankruptcy?” To be honest, many people who are dealing with debt problems think about debt consolidation loans or other similar solutions at some point. Most people begin wondering how debt consolidation works when they are searching for a way to make creditors and debt collectors stop calling and sending threatening letters. Others begin to explore debt consolidation options only when they are served a lawsuit.
When clients ask me how debt consolidation works, I first begin by explaining the difference between a debt consolidation loan and the use of a debt consolidation company. Before diving into these differences I make an extremely important point: these options generally only work in situations where individuals have the ability to repay their debts, or at the very least, a significant portion of them. There are very few cases where we find that debt consolidation is the best option for solving overwhelming debt problems. To illustrate, let me explain each option and give examples of when it will work and when it is often better to file a bankruptcy.
For many debtors, debt consolidation programs do not work. In fact, many people who file bankruptcy have already tried to resolve their debt problems by contacting one of the many debt consolidation programs that are advertised. These companies claim that they can resolve debt problems for pennies on the dollar, when in fact they are more concerned about making a profit than finding real debt solutions for their clients.
If you are wondering, “What is loan consolidation and will it help me?” you are not alone. Banks and loan consolidation companies target people who are struggling to pay their bills with advertising claiming that a loan consolidation can solve all of their debt problems. However, while loan consolidation may help some individuals, it is not always the best solution. Furthermore, there are several types of loan consolidations available, each having unique benefits and disadvantages. Before I go into detail about the various types of loan consolidations and how they may benefit you, I would like to provide you with a clear answer to the question, “What is loan consolidation?”
If you are struggling with debt, you are not alone. Many Americans face this situation every day due to job loss, loss of a spouse, medical illness or other circumstances that prevent them from paying their bills. Whatever your situation may be, it is important that you understand that there are options available to help you manage this burden and recover financially and emotionally. One possible solution for dealing with debt is debt consolidation. Debt consolidation can help individuals who are struggling to make minimum monthly payments on their credit cards or other debts. However, in some cases, debt consolidation could create more problems than it solves. While it may seem practical to consolidate debts into one, lower monthly payment, you must first consider the pros and cons to debt consolidation.
As a legal advisor, I've come across many people who've gone through some extremely nightmarish situations due to debt. They have been lied to about the financial services they selected, made poor financial decisions or encountered bad debt consolidation companies with programs they were assured would help.
You cannot and should not borrow your way out of debt, especially if you are currently not able to manage your debt. Doing so will result in extended payment plans, and, in the end, you will be deeper in debt than when you started. This is precisely the foundation that debt consolidation programs are built on. By extending your debt timeline you will pay more money; that money then gets paid to the debt consolidation company you “hire” to help you manage your debt.
Chapter 13 bankruptcy, also called a “wage-earners” bankruptcy, is essentially a repayment plan based on what you can afford. It allows you to prioritize your debt and make payments based on your income. This plan is best for those who are experiencing a temporary setback and need some time and space to breathe, in order to get their financial situation under control.
A debt management program enlists the help of a third party management company. You will work with a debt consolidation company or credit counseling agency to consolidate your unsecured debts into one monthly payment. Essentially you will make one monthly payment to your debt consolidation company or credit counseling agency. They will disperse payments to creditors on your behalf. You do not need a good credit score to qualify for a debt management program.
Debt is stressful, no matter what caused you to fall and lose control of your finances. Whether or...
Struggling with credit card debt is stressful and confusing. But it doesn’t have to be. There are...
In October of 2005 the new bankruptcy law, Bankruptcy Abuse Prevention and Consumer Protection Act...
So you live in Roseville MN and you had one of the 5 events happened to you which resulted in...
Life is humbling is it not? Who among us starts out in life with the dream of incurring...
Struggling with credit card and medical debt is stressful and confusing. But it doesn’t have to be....
What is Debt Consolidation? If you are struggling with debt, you may have considered debt...
Eliminating calls from creditors, reducing finance charges, lowering interest rates, and only...
As a bankruptcy attorney, I am often asked questions about consolidating debts, such as, “How does...
For many debtors, debt consolidation programs do not work. In fact, many people who file bankruptcy...
If you are wondering, “What is loan consolidation and will it help me?” you are not alone. Banks...
If you are struggling with debt, you are not alone. Many Americans face this situation every day...
As a legal advisor, I've come across many people who've gone through some extremely nightmarish...
You cannot and should not borrow your way out of debt, especially if you are currently not able to...
Chapter 13 bankruptcy, also called a “wage-earners” bankruptcy, is essentially a repayment plan...
Overview of Debt Management Programs A debt management program enlists the help of a third party...
